Khaisilk's owner has insisted that it only uses high-quality material, although not all of it is from Vietnam as advertised.

Inspectors in Hanoi raided a shop owned by famous Vietnamese garment brand Khaisilk on Thursday following a complaint that it was selling fake products made in China.

Tran Hung, deputy head of the trade ministry's competition department, said it had seized suspected counterfeit products worth VND30 million ($1,320) from a shop on Hang Gai Street in the capital.

Hung said Khaisilk products are much sought after by many tourists in Vietnam. "We've lost a national brand."

An official inspects a Khaisilk shop in Hanoi on Thursday. Photo by Anh Tu

Khaisilk is a renowned high-end brand with a history of over 30 years. The forgery scandal has come as a shock to many customers, reinforcing widespread doubt over the capability of local market management authorities.

The scandal broke when a business in Hanoi took to Facebook this week to complain about products it had bought from the brand saying they were actually made in China.

According to the post, the company bought 60 Khaisilk-branded scarves at the Hang Gai shop in Hanoi for VND644,000 ($28) each, but one scarf had two tags: “Khaisilk Made in Vietnam” and “Made in China.”

The company said it had checked the rest of the scarves and found signs that “Made in China” tags had been removed.

Hoang Khai, owner of Khaisilk Corporation, said that the scarves were actually imported from China.

Khai has apologized and offered compensation, the report said.

He said that half of the silk used by Khaisilk came from China, while the rest came from Vietnamese craft villages.

Yet he also insisted that his company always uses high-quality material.

Pham Ngoc Hung, vice chairman of the Vietnam Anti-Counterfeiting Fund, told Tuoi Tre (Youth) newspaper that Khaisilk is probably guilty of trade fraud for replacing a Chinese tag with its own tag to con customers.

“It’s unacceptable for a company to use its reputation to cheat customers with a fake product. That’s not to mention the quality,” Hung said.

Minister of Industry and Trade Tran Tuan Anh has ordered its market watchdog and competition management units to look into the matter for further signs of counterfeiting.